A New World for Small Start-Ups

The headlines are everywhere. Here are some recent ones from the Wall Street Journal:

  • “Companies and Cities Adjust to a Remote Work Force” (8 June 2020)
  • “San Francisco’s Office Market Cools as Startups Retrench” (early June 2020)
  • “Once Booming, San Francisco Apartment Market Reverses” (19 June 2020)
  • “Another Exodus Ahead for U.S. Cities?” (20 June 2020)
  • “Covid-19 Derails Retirement Dreams” (11 June 2020)

What does this mean for a creative technology entrepreneur who has a great idea, but has not yet implemented it, perhaps still needs venture capital funding to create even an initial product that would introduce the online universe to something new and useful?

A few months ago, it looked like I was going to have a very nice new long-term programming/writing gig with a smallish Silicon Valley company. It started when a friend of mine from long ago took a position with the company and was seeking to create a team to help him accomplish the objectives of his position. He called on me to prepare for the new work, which I did for several months. Then came a phone interview with his boss, which seemed to go excellently. I pretty much assumed I was going to have to suddenly allocate almost full-time hours to this new work starting almost immediately.

Then, suddenly nothing. Covid-19 happened. This threw the start-up into an unexpected chaos. They’d just gotten a new round of funding that included the project I would have been working on. But, with Covid-19 happening, the entire scheme of how to turn the new round of funding into profits became dubious. I haven’t heard from them in months.

At first appearance, it might seem like this economic disaster wouldn’t affect online start-ups all that much. After all, people are locked down at home, many are working from home. So, is the online start-up market somehow insulated from this downturn?

It seems not, to me. My experience is a perfect example: work there, ready to be started; then the work disappeared.

What’s happening in San Francisco is illustrative of the risk small start-ups are facing going forward. The rent for offices in San Francisco is very high. The virus is teaching us that many technology people can effectively work from home. But the danger of losing “face-time” in offices is a mitigation of collaborative creativity, the little discussions that happen by the water cooler or in the lunch room. People may talk about their favorite sports team or music, but they also come up with new ideas that are best nurtured by immediate in-person contact with their associates in their company. Email or online meetings are probably less effective in supporting the creation of these free-form ideas that can happen at a moment’s notice when someone gets an idea from something someone else said in person a few minutes previously.

Apartment markets crashing, retirement dreams fading, remote work force becoming the norm… Well, without a central office, it’s going to be much harder to convince a venture capitalist to fund your brilliant idea for a new product.

Everything is changed now.

–Kevin Farnham